You want to keep current with your mortgage payments so that your home remains secure, but you are having trouble making the monthly payments. What can you do?
Two different options may be available to you depending on your hardship.
Mortgage forbearance is the temporary pause or reduction in monthly mortgage payments that your lender allows for a limited time while you build back your finances. For most loans, forbearance does not come with additional fees or interest beyond what was already scheduled. Mortgage forbearance does not forgive or release the loan but temporarily alters your payments so that you can improve your financial situation.
When the forbearance ends, you will have to pay back the missed or reduced payments, but not all at once unless you want to. You can set up a repayment plan to make additional payments each month until the past due amount is repaid, or defer those repayments until the end of your loan period. You will eventually pay the full amount of the original mortgage.
If you have fallen behind on your mortgage, a loan modification may be a better option. This is an agreement with your lender to alter the terms of the original mortgage. You might make changes to the payment amounts, interest rate or length of the loan.
A loan modification will resolve your delinquency status with the lender. It will permanently change the original terms of your mortgage, giving you a fresh start.
The main difference
The main difference lies in the severity and length of the hardship you are facing, and the amount of help you need. Mortgage forbearance helps those facing a temporary hardship get back on their feet. Loan modifications are permanent help for those facing a long-term hardship or those who have fallen behind on payments to the point that bankruptcy or foreclosure are near.
Both mortgage forbearance and loan modifications allow you to stay in your home. To apply for either option, you must contact your mortgage lender directly. You will need to explain your current financial situation to them so that they understand your hardship. You will work with them to determine which option you qualify for and to outline the terms of either the forbearance or the loan modifications.